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1099-R generated Form 5329, I am 67+, should not have 10% penalty.

Forum|Forum|5 years ago
March 6, 2021
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2020 form 1099-R for 2019 roth contribution reversal
Form 1099-R gross distr: $8900, taxable amt: $1900, distr codes: PJ

I am amending 2019 tax return for above roth contribution reversal.
Received the 1099-R Jan 21, 2021.
TurboTax created form 5329 for additonal tax of $190 (10% on Early Distribution for people less than 59 1/2 years old.)
I am currently 67+.
What do I need to do in TT to correct this form 5329 tax penalty issue?

Best answer by macuser_22

Unfortunately a code J means you are under age 59 1/2 but for a return of contribution the J is required to specify that it is a Roth.

That is the consequence of the IRS using code J for two unrelated things.

If you are over 59 1/2 then on the "Lets see if we can lower your tax bill" enter the box 2a amount in the "Another Reason" box to eliminate the 10% early withdrawal penalty on the earnings.

VolvoGirl

Employee

New help article for getting the 10% penalty
https://ttlc.intuit.com/community/tax-topics/help/why-do-i-still-get-10-penalty-on-the-withdraw-of-my-retirement-even-though-i-answer-the-questions/00/2023931

macuser_22Answer

Employee

Unfortunately a code J means you are under age 59 1/2 but for a return of contribution the J is required to specify that it is a Roth.

That is the consequence of the IRS using code J for two unrelated things.

If you are over 59 1/2 then on the "Lets see if we can lower your tax bill" enter the box 2a amount in the "Another Reason" box to eliminate the 10% early withdrawal penalty on the earnings.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**